Question

A machine with a cost of $168,000, current year depreciation expense of $26,500 and accumulated depreciation of $104,000 is sold for $55,200 cash. The total amount related to this machine that should be reported in the operating section of the statement of cash flows under the indirect method is:

Answer 1

Answer:

$17700 inflow as profit on disposal in investing activities

Explanation:

In order to find the carrying amount you need to subtract the current year depreciation and accumulated depreciation from the cost :

168000-26500-104000=37500

and then subtract your cash amount from your carrying amount

55200-37500=17700

because depreciation is not a cash inflow or outflow it is a non cash accounting item it does not have place in the cash flow statement however the net income will be depicted